Greece is still several steps from chaos. Athens has entered a period of political instability that will probably lead to an election won by Syriza. This radical left group’s policies could prompt Greece’s exit from the euro, the so-called Grexit, if fully implemented. But for this to happen, a series of unfortunate circumstances would have to prevail.
First, Parliament must fail to elect a new president. This, admittedly, is likely. A president needs the support of 60 percent of the members of Parliament, and the government can count on only just over 50 percent to support its candidate.
However, there is a slim chance that Prime Minister Antonis Samaras can persuade enough members to switch sides to cross the threshold. There is also a small chance that the conservative prime minister himself will be replaced by a technocrat as the price for cobbling together the majority needed to elect a president.
In either case, Athens could resume negotiations with the so-called troika of international lenders — the European Commission, the European Central Bank and the International Monetary Fund — about future financial support. Greece would have to agree to tighten its 2015 budget a bit, continue with structural reforms and accept monitoring of its economic actions. It would be easier to swallow these conditions after a successful presidential election.
In return, Athens would receive a final dollop of cash from its current bailout program and a precautionary credit line from the eurozone’s bailout fund. It might also get more time to repay the money it has borrowed from the eurozone. With all this in place, Greece could tap the bond markets to finance itself.
However, the government will probably not be able to secure the election of a president. Although the post is largely ceremonial, the constitution says there would then have to be a general election.
If Mr. Samaras won that election, which would be held around the end of January, he could then continue negotiations with the troika. He would seek to scare voters into backing him by painting a lurid picture of what a Syriza government would do.
But it is unlikely Mr. Samaras would succeed. Alexis Tsipras, the Syriza boss, has a solid lead in public opinion polls. He would almost certainly emerge with the largest party.
If Syriza implemented its program, the prospects for Greece would be bleak. Among its string of populist policies are plans to write off a chunk of the government’s debt and expand public spending. Both ideas would provoke a confrontation with the troika that would put Athens on the fast track to bankruptcy.
While the eurozone might be prepared to vary the terms of Greece’s borrowings, it would not accept a write-off. Nor would it agree to let Athens renege on a commitment to control the country’s budget deficit. Mr. Tsipras would not be able to blackmail the eurozone because a Greek bankruptcy would probably not lead to domino defaults elsewhere.
Without a deal with the troika, Athens would not be able to access the bond market and would run out of money. There would then probably be a run on the banks, followed by capital controls. If Mr. Tsipras still did not come into line, Grexit would loom.
Another reason is that, even though Syriza is highly likely to be the largest party after a general election, it is unlikely to get an overall majority. To form a government, it would probably need support from one or both of two center-left parties: Pasok or To Potami. Both of these are pro-European and would tend not to sign up to a program that involved charging over the precipice.
Syriza might struggle to form a government at all, because the compromises it would need to make to win over these other parties would be hard to sell to its radical wing.
In that case, there would have to be a second election. While it is hard to predict how that would play out, the conservatives might make a comeback — especially if they ditched the unpopular Mr. Samaras and replaced him with somebody like Kyriakos Mitsotakis, a younger, more centrist leader.
Replacing Mr. Samaras might actually be the best outcome. Although Mr. Samaras is preferable to Mr. Tsipras, he has been an erratic leader. His most recent error was to promise prematurely that Athens would exit its bailout program — a move that frightened the markets and so made it impossible to secure a clean exit. This was terrible timing, as Greece had finally turned the corner after its terrible recession.
The ancient Greeks believed in Tyche, the goddess of luck. Sometimes she brought good luck, sometimes bad luck.
Tyche is stalking her homeland again. Political risk has shot up. The various scenarios and sub-scenarios have multiplied. One of these — a Syriza government that implemented its populist policies — would spell disaster. But this is not the most likely outcome. And other scenarios are more benign.
Hugo Dixon is editor at large of Reuters News.
Source : http://www.nytimes.com/2014/12/15/business/international/greece-is-not-headed-for-the-door-just-yet.html?partner=rss&emc=rss&_r=0